However, the income has not increased in that proportion. Many people lost their jobs during the two years before that. In addition to joining new jobs with much lower pay, there are many people whose office has reduced their salary without losing their job. On average most of the salaried workers are continuing to work on 2019 salary. A large section of the country is looking at more tax breaks, especially under Section 80C of the Income Tax Act. A recent study by Kuber, a financial planning startup, paints that picture.
Two out of every three respondents to their survey want an increase in the tax deduction under Section 80C of the Income Tax Act. Currently, the maximum tax deduction is Rs 1.5 lakh under this clause. Majority of the respondents want the Center to double that amount. In the first week of January, Kuber, an online investment and financial planning startup, asked its 16 lakh users what they expected from the upcoming budget. The company said that this information emerged in response to the survey participants.
Gaurav Rastogi, co-founder of Kuber, said, “Respondents favored doubling the current tax exemption of Rs 1.5 lakh. There has been no change in the current ceiling since 2014 and taxpayers are clearly asking for a bit more exemption in the next budget.” According to another firm Ilara Capital, the economy is now in a ‘relatively stable’ state. In addition, the adverse effects of the coronavirus pandemic, higher commodity prices, interest rate hikes, the upward movement of the dollar and the decline in supply caused by the Russia-Ukraine war are also absent. In this situation, the Center may be a bit flexible keeping in mind the people while announcing the budget.
Many of the survey participants reported another benefit. They requested that no tax be levied on conversion of the same mutual fund scheme from regular to direct mode. About 30 percent of respondents reported this expectation. At present the scheme is taxed. The Center may announce new measures to bring down the budget deficit below 5 percent. The issue of fiscal foresight has never been a priority for tax payers, and this time too, they do not seem to have much of a headache about it. Less than one in ten respondents want the Union Finance Minister to reduce the budget deficit by more than 5 percent.
In this context, Kuber’s Gaurav said, “According to our survey, taxpayers, at least those who use our platform, are more interested in tax breaks than reducing the budget deficit. When fears of recession are slowly looming large, tax breaks allow the common man to save more.” Giving will be the right decision.”
Assembly elections are coming up in several states. Moreover, this is the Modi government’s last budget before the general elections in 2024. But, despite this, the Center will insist on maintaining the broader economic situation. In that case, besides increasing the expenditure on various projects, the Center can formulate new policies to increase the purchasing power of the lower classes of the society, experts feel.